Tips on starting your own software company
Do you have an idea of the software? Would you like to know if it is possible to start up without a huge investment? Do you need to have a technical skill? Many questions arise when you have a challenging idea. The Efisco software development outsourcing company is ready to help you with it.
Here is our step by step guide to establishing a software development company.
Before starting a software development company, you need to conduct market research. You need to identify your competitors, target audience, and their needs. Moreover, you need to analyze the stage you are entering the market. It can be an introduction, maturity, or decline.
An introduction stage means that there is no such software on the market, so your product may be either on-demand or in no demand at all. You need to encourage customers to use it.
Here is an excellent example to illustrate this idea. Airbnb launched a website in 2008. Their primary goal was to give people looking to book accommodation worldwide, a secure tool doing so. The primary idea was allowing tourists to rent from local citizens. In the beginning, investors were skeptical about this idea because they believed no one would rent out their apartments to strangers. Yet, Airbnb was founded during the Great Recession. People were interested in earning extra money, so it gave the service popularity. Now, Airbnb is a one-stop-shop to rent an apartment abroad. It has more than 200 million guests actively using the website and mobile apps, covering more than 191 countries.
Another good example is Uber, the app was launched in 2009 and kickstarted during the crisis. Uber is a ride-sharing app when the user can book drivers who use their own cars. Both drivers and users were satisfied with the service since the first ones could earn extra money, and the second ones can get cheap rides. Now, it is a global service that operates in 83 countries and 737 cities.
As you see, Airbnb and Uber had fresh ideas at the right time when the market was ready for them. But sometimes ideas show up too early.
In the 90s, an online entertainment company Z.com attracted about a million visitors per month. The company provided streaming video service until 2003 when it went out of business. It has enough funding and a massive advertisement campaign. Still, its founders didn’t consider that the user’s internet connection was not ready to watch video content online. In two years, after Z.com closed and broadband internet connection became available almost everywhere, Youtube won the market. It was too early for such technologies, so Z.com failed.
The maternity stage means that your competitors are already on the market and gain revenue on similar software. But there is still a niche on the market, so you can create an alternative that can be more affordable or powerful. It is known to be the best stage to enter the market.
Kaltura, Inc, founded in 2006 had launched a video platform that allows us to manage, distribute, and publish video online. Since many big players like Youtube, Vimeo, and Dailymotion, the company focused on several sectors, such as education, enterprise, and media. Now, there are more than 300 000 enterprises, media, and education organizations. As you see, it’s possible to succeed at the maturity stage by focusing on particular niches instead of covering everyone’s needs.
It’s hard to stay competitive during the decline stage since other companies are similar to yours, and your idea gasps behind.
Rdio, Inc., was launched in 2010 as a music-streaming website on a subscription basis. The service was popular in 85 countries worldwide, yet, it was staggering behind Spotify. As a result, it became bankrupt.
These examples show that if you plan to launch a new product, you need to ensure that your potential customers are not fully satisfied with the solutions they already use. Your software should be different from the other on the market.
So, choosing the right stage to enter the market is a vital part of your success. While developing the product, you must be focused on your potential consumers rather than on the software itself.
Pick the way to sell your software
Monetization, or the way you will gain profit from your software, is essential as well. Investing in the idea which you do not know how to monetize is useless. If your product has competitors, you might be interested in how do they gaining a profit. Do research first to see the model or models you might use.
If you are planning direct sales, be ready to deal with companies of different sizes. So, your team should know how to work with them both.
It is possible to sell license, subscription, or distribute your software for free, allowing so-called “in-app” purchases for the users who need more functionality. As for subscription service, it’s worth to offer free trials to attract customers. People who used your software for some time free will more likely purchase it.
Running a software development business
If you are not a tech savvy person, you still may run your business. But it’s a good idea to have a technical partner. This person might be involved in your project part-time and review the architecture and code from time to time. In exchange, you can offer them equity in your company, but you will share your growing profit with this co-owner in the future.
Another option is to find a reliable vendor providing software outsourcing services. Yet, you will depend on them since there will be less control over the software development process. Additionally, you should allocate extra time and budget for communication and quality control to ensure the software meets your requirements.
Another good idea is to set up your own dedicated team with a company like Efisco. Here you will get full control over your resources, and the software will meet your highest standards and requirements.
After market research and monetization choice, you are ready to create your own software development project. Here are the steps to follow:
- Protect your intellectual property. Obtain necessary patents and trademarks to protect your idea. Sign a non-disclosure agreement with your collaborators to protect your project-related data.
- Create a business plan. Here you should state your business proposal, product, target audience, and competitors: outline financial needs and expected time to market.
- Legal issues, taxes, and insurance. Determine your business’s legal structure, find out what will be taxed, take care of insurance if something goes wrong.
It is costly to have an in-house team. You need not only take care of hiring but also work-stations and various legal documents preparation.
You may consider hiring an outsourcing company, yet, they won’t be dedicated to your project since most of them are earning using a volume-based model. On the other hand, you need an expert to achieve success, and here come outstaffing teams. Outstaffing company has the expertise to hire the resources you need for your project and guide you at each step of building your own team as if it were in-house but less expensive.
Nevertheless, if you decide to roll into a standard outsourcing model, here is what you should know:
- You are planning the next big thing, so you should not hire freelancers. You might not have enough expertise to manage a virtual team.
- Choose only reliable companies that can provide references to their past clients and have a good reputation online.
- Make sure that you own a source code after the delivery. If you are forced to change developers, you might need to keep source code to not start over with the project.
The testing of software reveals bugs and ensures its quality. High-quality software is the basis of customer satisfaction. As a result, you are gaining a profit and reputation.
Here are the several testing options you might consider:
- Testing should be conducted by a company that develops your product. There will not be cooperation issues, and these guys know your project well.
- If you have doubts about your software development team, you may choose a separate quality assurance company. They will bring fresh expertise into the project, yet they might need some time to study your project.
- Test yourself. From time to time, you might ask the team to allow doing some tests of your software. Yet, you need to learn a little about it before rolling into this option.
MVP (Minimum Valuable Product) is a must for any software project. The prototype allows you to check how the software will look like after the release. MVP also will enable you to decide if the product is worth the time and money to finish it. Moreover, you might fix the mistakes and add features at an earlier stage.
Additionally, MVP allows you to get venture capital, grant, loan, attract investors, or get other online funding resources.
Software development is a costly and time-consuming process. It needs a lot of effort, and you need to choose thoughtfully when making decisions. It’s a challenge. However, we can go together through it. Build your own software development company with Efisco dedicated team set up service.